Archives of “April 24, 2020” day

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Some bleak outlooks for the global recession ahead

  
Analysis, Economy
Some of the commentary in the piece from Reuters is very downbeat indeed.
JPM:
  • “The global economy is collapsing at a pace not seen since World War Two”
  • “Staggered re-openings of economies until a vaccine is widely available imply more of a U- rather than a V-shaped recovery for the global economy.”
HSBC:
  • “We are likely to see a deeper contraction in 2020 than during the global financial crisis. But so much depends on what comes next: how long the suppression measures last, what medical science can deliver, what further policy support is available”
  • “What is already clear is that this is not just a short-term issue: the medium to long-term implications for global growth, debt levels, public policy and globalization are going to be vast.”
Rabobank:
  • “We are seeing credible claims in the UK and U.S. that millions/tens of millions are going to be unemployed – again taking us back to black-and-white memories of long queues of the jobless holding signs saying ‘Will Work For Food'”

Reuters poll shows global economy expected to have its steepest contraction on record this year

  
Analysis, Economy

Reuters polls of economists surveyed over the past few weeks

  • global economy will suffer its steepest contraction on record this year
  • a longer, U-shaped recovery more likely
  • More than 55% or 87 of 155 economists said the global economic recovery would be U-shaped
  • Thirty-one analysts said it would be V-shaped
  • 24 said it be more like a check mark
  • A few respondents expected a W- or L- shape
Global economy was forecast to shrink 2.0% this year
  • compared to a 1.2% contraction predicted just three weeks ago and growth of 1.6% forecast before that in the March 20 poll

The Brazilian real hits all time low as it’s the worst emerging market currency this year

  
Analysis, Forex
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Hard times in Brazil

The market seems to love the idea of opening up while hating the idea of not closing at all.
USD/BRL hit a record today at 5.50. The Brazilian real is now down 26.7% on the year with hardly a bounce off the bottom.
Hard times in Brazil
What’s even worse is that the Brazilian bovespa is one among the world’s worst performing equity markets — possibly the worst. In BRL terms it’s down 31% and in USD terms it’s down 49.3%.
The latest leg down in the currency comes on increasing bets of rate cuts and proposed amendments to the constitution to allow the central bank to buy government and corporate bonds.

Eurozone vulnerable during global shocks; more downside risks towards 1.02 – BofA

  
  Analysis

What’s the trade in the euro

Bank of America Global Research discusses EUR/USD outlook and now targets a move towards 1.02 in Q2 and Q3. 

“As most Eurozone economies remain in various forms of lockdown to contain COVID-19, the economy is collapsing. We expect real GDP in the Eurozone to drop by 7.6% this year, with risks to the downside, compared with a drop of6% in the US. Macro policy support, although necessary, cannot change the dynamics of an economy that has shutdown. In any case, the fiscal stimulus policies in the Eurozone have not been as strong as in the US: 2% of GDP vs. 9% of GDP, respectively.

The proposed Recovery Fund could help, but a lot will depend on its size, conditions and debt mutualization. COVID-19 infection rates have dropped, but at a very slow pace and remain high. Plans in a number of countries to open up their economies are too gradual and their end-game is far from normalization to the previous regime,” BofA notes.

“We expect EURUSD to weaken to 1.02 in 2Q and 3Q, recovering gradually to 1.05 by end-2020,” BofA adds.

Dow books meager gain as report on Gilead’s experimental coronavirus drug quashes stock-market rally

  
Analysis, US Market

The Dow Jones Industrial Average US:DJIA eked out a gain, rising 39.44 points, or 0.2%, at around 23,515.26, buttressed by gains UnitedHealth Group Inc. US:UNH, which rose 3% on the day. The blue-chip benchmark had hit a high at 23,885.36.

Meanwhile, the S&P 500 US:SPX edged up 1.51 points or less than 0.1%, at 2,797.80, with an intraday peak at 2,844.90. The Nasdaq Composite US:COMP gave up less than a point to end the session virtually unchanged at 8,494.75.

For the week so far, the Dow is off 3%, the S&P 500 is down 2.7% and the Nasdaq is down 1.8%.

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